> Globalization has played a big role in creating the massive income inequality in our country; it seems like we should fix that.
Wouldn't restoring the prior taxes to those with highest incomes, and adding a proper capital gains tax, address this directly? As I've started to accumulate small amounts of wealth I've realized, my capital gains are taxed lower than my income; when I sell my house, I get up to 500k of gains tax free. If I backdoor a Roth IRA, I get tax free gains there too. etc. Add additional taxes to investment properties, in the form of property taxes could be one approach as well - I personally know of one investor that owns at least 20 (SFH) properties for example. So I'd propose starting there, as it targets both the wealth gap as well as hits those who can most afford it directly.
> Tariffs accomplish both of those, raising money at the same time as raising cost of goods and weakening the dollar.
If tariffs significantly reduce demand, or worse cause a recession, they will have the opposite effect. It would take time to sort out the full impact. But AFAIK, the tax cuts are proposed to be pushed through immediately, without firm corresponding spending reductions nor time to sort out the impact of the tariffs; similarly the tariffs are being implemented in what seems like a haphazard way, with everyone unsure of what they would / will be, how much, etc.
In general, I think if the plan were modest tax increases, esp. around capital gains policy and targeting SFH as investments, (very) modest tariffs, and well executed spending cuts, nobody would be in uproar. I will be pleasantly surprised if the current plan ends well, but it certainly feels as though only those steeped deeply in ideology are supportive of them at the present moment, and I think that is probably telling.
This was actually the real cause of the collapse of Zimbabwe. The tax base disappeared. People think it's just because they printed into oblivion but that's not the full picture.
in 1800, 95% of American were farmers
in 1900, some 65% of Americans were farmers
in 2020, it's down to like 5%.
My point is some industries just die. And its okay. The solution is not to go backwards, but tax the winners of the change to subsidize and retrain the people who lost.
But in America, the extreme winners have convinced the rest of us that we shouldn't tax them, and Trump is now asking us to instead tax everyone more
> in 1800, 95% of American were farmers in 1900, some 65% of Americans were farmers in 2020, it's down to like 5%.
> My point is some industries just die. And its okay.
You've got your example dead wrong. American farming didn't "just die," it got insanely more productive.
And a lot of the industries people want back didn't "just die," they just got moved so the "extreme winners" could profit off them even more. And then those same winners and their defenders always go "herp derp, industries gone, nothing we can do! Don't fight it, just repeat: gone foreverrrr."
Regulations kill any and all profit on physical goods made in the US. It was more important to lift China out of poverty (Communism), kill a whole class worth of jobs and enact regulations to stifle any innovation because it’s okay if China pollutes, just not the US. It’s okay to buy goods from mega polluter China shipped on boats running on crude oil, instead of supporting Americans and American companies.
As you are about to find out with a president who is busy removing as many regulations as possible, consumer/worker/health/environment-protecting regulations are not the reason why physical goods are not made in the US anymore.
The vast majority of industries from the past are now highly automated and would be made even more so if the alternative were paying US-scale living wages to the employees.
So you bring the factories back to the US, but 95% of the created jobs are for robots.
100% this, in 2010 I briefly worked for a company that built assembly lines in the US and number one requirement for every client was reducing the number of workers needed. Almost every project going at the time reduced the number of workers by 80%+ and I imagine it's only become more automated since then.
It is absolutely wild to me that money gained from letting it sit is taxed less than money gained from working your ass off. A crime against the working class.
The point is that this isn't some fundamental property of our society that we all agreed to. It's de facto capitalist, not de jure. Just because a bunch of people pushed it one way doesn't mean we have to throw up our arms and just go with it.
That's the entire reason why income tax is progressive, and there's no reason that couldn't be applied to any other implemented tax including capital gains.
Hard disagree. Compared to the OECD average, we collect almost double in personal tax revenue as a proportion of total tax revenue. What's more, historically personal tax revenue as a % of GDP stays roughly the same - regardless of active tax rates.
Where we fall dreadfully short compared to other countries is corporate tax revenue. In 2021, corporate income tax revenue in the U.S. was 1.6% of GDP, compared to the OECD average of 3.2%
It's messed up from first principles - hard work should be valued as a society over investment gains, and reflected at the individual level in take home income. Obtuse measures and comparative aggregates are irrelevant.
“Should be” is doing a lot of heavy lifting there - I have heard reasonable arguments either way - but it misses the point: whether the personal tax rate was all-time high or an all-time low, personal tax revenue stays roughly the same historically. In other words it’s a trap - raising the rate might make you feel better, but if history is any indicator it won’t change anything for everyday citizens.
Thomas Sowell makes a good argument that the government does a terrible job at redistributing wealth to lift the poor, based on their track record. And so taxing the rich more doesnt actually solve that problem — it just makes politicians and their friends richer.
Also when talking about tariffs reducing demand and inflating prices, I think it’s important to note that’s partly true. It doesn’t raise prices of domestic goods and actually increases demand for domestic goods.
He's one economist from a very conservative line of thinking.
As a counter example, Thomas Piketty argues at length that taxation and wealth redistribution remain an effective way to bolster a societies resilience and lessen wealth inequality - which is still a very real issue in the world, and arguably one that the US shows can have very real negative consequences for letting it go unaddressed.
As for demand and inflating prices, yeah, domestic products may be more attractive, but the economy is huge, and much of it does not have a domestic allegory. The other issue here is the tax is on all imports, not only manufactured goods, which means raw materials - which often have to be sourced elsewhere - make manufacturing more expensive even domestically
I liked Sowell's book, "Wealth, Poverty and Politics". Can you recommend one of Piketty's books?
> raw materials - which often have to be sourced elsewhere
Is that necessarily true? The US has abundant natural resources. Tesla could be mining lithium a few hundred miles away from their factory instead of importing it...
>I liked Sowell's book, "Wealth, Poverty and Politics". Can you recommend one of Piketty's books?
I'd say start with Capital in the Twenty-First Century by Thomas Piketty. Its a great read, if a bit thick (its a very large tome indeed and very information dense)
>Is that necessarily true? The US has abundant natural resources. Tesla could be mining lithium a few hundred miles away from their factory instead of importing it...
Its about access, cost, amount, etc. One company getting lithium is a rounding error. The entire market for lithium is bigger than Tesla and even electric cars. Then there is the entire question of how fast you can get the lithium online. Its not like most (if any) of the businesses reliant on lithium - which again, more than just auto makers certainly - take in raw lithium and produce something with it. It is typically pre-processed depending on its use. So that needs to come online too. Also, is there enough of the US workforce that can get this material online quickly? We're talking years before something comes online in sufficient quantity to be meaningful, let alone replace other sources.
Then you have to ask how much of the given resource do we even have? Whats the quality? Not all lithium deposits are the same, after all.
And many more questions I am not likely thinking about, and this is only in regard to lithium. Think about the raw materials for everything in our lives - gold, silver, uranium, iron etc. and you'll find in more cases than not its simply unfeasible to start mining & processing it in the US, you will have to import it.
Your idea of what this takes is, frankly, a bit too simplistic to be realistic or useful until it answers all of these kinds of questions.
Remember when Piketty advised the government of François Hollande? They enacted the wealth tax and there was simply a ton of capital flight and nothing was fixed? Leading to Macron winning the elections and enacting a ton of conservative policies and leading to pretty decent economic growth...
As I recall, Hollande decided to ignore all the advice around him[0]
>Mr Piketty’s second criticism touches on Mr Hollande’s tax policy. For years the French economist has argued for a more progressive tax system, which would merge both income tax, currently paid by only half of French households, and the “contribution sociale généralisée”, a non-progressive social charge paid by all. This too was one of Mr Hollande’s campaign promises. Yet the president has shelved any plans to overhaul the tax structure, preferring instead simply to increase taxes on the middle-classes and the rich.
First off, capital flight is not a good argument against high wealth taxes, it's an argument for more controls to prevent people from doing this, so they are forced to reinvest in business.
The wealth tax was in for a meager 2 years, and the richest in the country started calling it "anti-business" even though they were transparently refusing to reinvest that money in their company. Anti-business is shorthand for "We can't hire the 1 high-earner executive we want to play golf with instead of the 100 lower level employees that would actually help the economy."
Instead, they kept THEIR salaries and ate that tax cost, and told their employees they would suffer during these times. It was a coordinated effort to discredit something that was meant to create more jobs. Much like when Saudi Arabia artificially restricted oil until after the 2020 election. And the administration had no controls on this.
So yes, high taxes on the rich by themselves are worthless, but that doesn't mean those policies coupled with tighter controls aren't essential for wealth inequality.
Of course, conservative news is going to talk about this in the context of debt, and claim because the amount raised did not match the debt (moronic) that it was clearly a bad idea to tax the rich, when the real takeaway is there needs to be more controls and a bigger spotlight on how these scumbags jerk the system around. At the end of the day, they are trying to keep their yachts and their massive, unnecessary mortgages, and will fight tooth and nail to do so, and anyone falling for news stories about "oh it didn't work in 2 years, my boss said I was going to take a salary cut" is helping that agenda and nothing else.
The way its being framed in the public - and often in discussions even in this Hacker News comments section - is its an alternative to raising other taxes. Trump is selling it that way, along with simultaneous tax cuts he wants to either extend or implement, which goes to show the tariffs are not some way of addressing the national debt concerns either.
While nothing does, the actual discussion around it isn't allowing any room for non-tariff tax increases regardless.
I agree with your point about how the discussion is framed. To add to where it should be framed, in my mind, you can toss in cost cutting at the federal government in there as well.
Neither tariffs nor cost cutting, unless it targets major programs such as Social Security or Medicaid, will have an effect on the national debt or the deficit.
Cost cutting always enters the equation, because somehow its better to eliminate benefits. Why not reform the programs? There is actually ample room for this, particularly with Social Security. Why not raise revenue via land value taxes, closing tax loopholes and other less and/or non regressive means?
The social safety net in this country is already terrible, making it more terrible by cutting the programs won't be better for anyone except a slice of the wealthy
> taxation and wealth redistribution remain an effective way to bolster a societies resilience
Tangentially:
It’s wild how inconsistent the public and political reactions are to different ways of getting revenue. Take this common pattern:
When DOGE identifies billions of dollars in waste, fraud, or unnecessary spending, the reaction is often: "That’s only 0.01% of the federal budget. It’s nothing!"
But when someone proposes a tax on billionaires that would over time raise a similar amount suddenly the reaction flips: "We’ll solve inequality! Fund healthcare!"
This contradiction is everywhere. How can $20 billion in government savings be "nothing," while $20 billion in new tax revenue is "transformational"? It's the same money.
>When DOGE identifies billions of dollars in waste, fraud, or unnecessary spending, the reaction is often
Did DOGE actually identify significant levels of any of this or is it simply labeled that for the expedited purpose of shrinking the federal government's effectiveness by any means possible?
They've been far less than transparent with the data that supports their findings and have been called out numerous times for misrepresentation[0][1][2][3] and lack of transparency which took a lawsuit to at least partially recitify[4]
I don't know who these people are that you're talking about, who only propose taxes on billionaires and not the rest of the upper class, or who have compared those two numbers and seen they are different. I would imagine you're talking about two different groups with different figures.
Regardless, "taxing the rich" is not one mediocre policy, but several interdependent policies. It's not just picking the 5 richest people in the world and taking their money. The transformation doesn't come from redistributing $20 billion (wherever that figure is from) but encouraging executives to reinvest into their company instead of trying to suck as much cash out as possible.
Bobby Kotick making $155 million a year while Activison lays off hundreds of employees is insane. What on God's earth could you possibly need more than $20 million a year for? That is not right no matter you slice it. That money needs to be aggressively taxed so it is instead used to keep people employed at a much lower tax rate, not in the hopes that the government can use it for spending.
I don't think anyone would scoff and the discovery and elimination of waste or fraud. I think the vibe you're describing is doubt that these supposed billions in waste/fraud/abuse live up to the hype.
Surely there's plenty of waste in federal spending but I suspect the vast majority is not going to be blatant and easy to identify
NPR did in their February article about DOGE; their story is ostensibly that out of everything claimed, NPR could verify “only” $2B in cuts which they present as meaningless:
> NPR's analysis found that, of its verifiable work completed so far, DOGE has cut just $2 billion in spending — less than three hundredths of a percent of last fiscal year's federal spending.
> "Think of Congress and its budget as the debt-ridden dad on the way to buy a $250,000 Ferrari on the credit card, and DOGE is the $2 off gas card he used along the way," Riedl said. "It's great that he saved $2 on gas, but I think his wife may be more concerned about the $250,000 car."
Not necessarily, if there's adequate competition and no collusion. I think of Costco's Kirkland products which have a capped profit margin, for example.
The argument is that increasing government revenue doesn't automatically mean We the People benefit; it usually means more pork and other ways of funneling money to benefit the people with the power to funnel it.
It’s hard to see tariffs on steel (say) not raising wider domestic prices. Any domestic industry using steel (car making, house building etc) presumably now has to pay more for its steel which feeds through to consumer prices. You might increase the number of steel worker jobs but at a hidden wider cost to the wider US economy.
We already have Section 232 tariffs on steel and aluminum imports, and have since March 2018. These new tariffs exclude steel (since we tariff it already).
Sowell would be against tariffs, he’s a free market fundamentalist.
As usual, libertarianism is used as a justification for corporate fascism, mercantilism, taxes on the poor… basically the Republican agenda. Funny how that works.
The tax increase wouldnt be used to create better jobs, they would be used bolster social welfare and reduce the national debt, at the expense of wealth generation in the upper class.
The primary benefit of the approach is that the pre-tarrif economy is strong, health care, high prices, and very high SFH prices are the primary ways people are hurting. Modest taxes as noted above address 2/3 without upending the economy in the process.
Prices wont come down, but unlike the tarrif plan they also wont go up so... seems like a better option at least to my relatively uninformed brain.
Increased taxes (on the wealthy) could also be used, not just to pay down debts, but to start new programs like expanding domestic production, back loans for small businesses and house construction. Heck even just 'new new deal' style jobs that build infrastructure.
Though I am partial to using new revenue to increase competition (new startups) in weakly competitive markets. That's the most effective way of increasing supply, and choice, and letting a market function.
Wouldn't restoring the prior taxes to those with highest incomes, and adding a proper capital gains tax, address this directly? As I've started to accumulate small amounts of wealth I've realized, my capital gains are taxed lower than my income; when I sell my house, I get up to 500k of gains tax free. If I backdoor a Roth IRA, I get tax free gains there too. etc. Add additional taxes to investment properties, in the form of property taxes could be one approach as well - I personally know of one investor that owns at least 20 (SFH) properties for example. So I'd propose starting there, as it targets both the wealth gap as well as hits those who can most afford it directly.
> Tariffs accomplish both of those, raising money at the same time as raising cost of goods and weakening the dollar.
If tariffs significantly reduce demand, or worse cause a recession, they will have the opposite effect. It would take time to sort out the full impact. But AFAIK, the tax cuts are proposed to be pushed through immediately, without firm corresponding spending reductions nor time to sort out the impact of the tariffs; similarly the tariffs are being implemented in what seems like a haphazard way, with everyone unsure of what they would / will be, how much, etc.
In general, I think if the plan were modest tax increases, esp. around capital gains policy and targeting SFH as investments, (very) modest tariffs, and well executed spending cuts, nobody would be in uproar. I will be pleasantly surprised if the current plan ends well, but it certainly feels as though only those steeped deeply in ideology are supportive of them at the present moment, and I think that is probably telling.